CHINA claims that its policy of allowing a limited number of enterprises to trade abroad benefits the country's trading partners. The policy is included in the draft Foreign Trade Law, copies of which were presented to participants at the 14th session of the working party of the General Agreement on Tariffs and Trade on China in Geneva. Some participants were concerned that the granting of foreign trade power to only a few import and export companies would be used as another kind of trade barrier. ''The system of granting the power to qualified companies is aimed at enhancing the development of foreign trade, instead of using the allocation of foreign trade power to hinder trade,'' said a Chinese official involved in the talks. Mr Li Zhongzhou, deputy director of the Department of International Trade and Economic Relations under the Ministry of Foreign Trade and Economic Co-operation, noted that between 1987 and 1988, the number of foreign trade companies suddenly surged fromabout 14 to about 5,000, causing a lot of problems. ''Many of the companies actually were not qualified to take part in foreign trade, they did not have experienced personnel, and did not know the foreign trade procedure. ''After signing a large number of contracts, they found they could not honour the agreements because they were short of money or did not have sufficient markets,'' he said. Mr Li said that at present, as well as about 5,000 designated foreign trade companies, about 500 production-oriented and foreign-funded enterprises were allowed to trade abroad. ''This is sufficient to ensure competition among the companies and the arrangement is useful in protecting the interests of China and its business partners,'' he added. During the five-day talks, China seemed willing to seek a compromise with GATT's contracting parties on the protection of its agricultural sector. The Chinese delegation agreed that it would not insist on exemption from GATT provisions on agricultural policy. China had previously held that because more than 80 per cent of its population were farmers, it required special treatment. ''The livelihood of this section of the Chinese population is extremely important to the country's stability,'' said Mr Li. But, he said: ''We have taken the opinion of other contracting parties [to GATT] into full account and will not insist on seeking overall special exemption.'' However, the country will protect its agricultural sector within the framework of the Uruguay round of talks on agricultural products. ''The major exporters of agricultural products have been heavily subsidising their exports over the years. The amount of subsidies involved could be higher than the total annual imports of China,'' said Mr Li. ''Therefore, not seeking overall special exemption does not mean we will completely open our agricultural sector and it is unreasonable for other contracting parties to require us to do so.''